72T distribution rules
I have a client DOB 09.20.1959 who elected distributions under the 72t rule starting in 2017. this client took the systematic, equal distributions in 2017, 2018 and 2019. the client is looking to take an additional distribution in 2019 above the equal amount calculated unter the 72T…can this additional distribution be taken without violating the 72t rules and would it be subject to the 10% penalty? this client turned 59 1/2 on March 20 2019.
Permalink Submitted by Alan - IRA critic on Mon, 2019-03-25 22:50
The additional distribution would bust his plan and he would owe the penalty on all distributions he took prior to 59.5. There would not be a penalty on the distribution that busts the plan because it will come after 59.5. He would report the busted plan on Form 5329 with his 2019 return and would owe this penalty then, and the IRS may well also bill out late interest on the penalty as well. He does not have to amend any prior year returns.